Plenty of readers of Wonkhe have fond memories of living in HMOs when they were a student and don’t really see a case for change. Never did me any ‘arm, etc.
I expect it’s partly survivor bias and partly a misunderstanding of just how awful that market has become (a “living room”? hahahah), but I think it would be fair to say that in reality, reform to the regulation of the private rented sector is long overdue.
The other week, for example, I was doomscrolling through a landlord forum site and I came across this pearler:
I am a Landlord to HMO students and have fallen foul of the impending enormous price increases in energy which are due soon. I rent all of my student properties ALL inclusive with bills for a fixed cost. This isn’t normally a problem, but as my students sign 12months in advance for the next academic year, I haven’t been able to foresee the unprecedented massive energy price increases and now the rent I am charging for the next academic year when they move in Sep 2022 is no where near enough to cover the bill costs, i could normaly ebsorb the costs, but the houses are huge 8 bedrooms 4 story buildings and im looking at bills going up from about £325 to over £800 a month!
I have tried to talk to the students and explain that I need to increase the rent to cover my costs, but they are playing hardball saying they have signed a fixed price contract. Can I cancel the contract and re advertise the property as I think they are being wholly unreasonable given the circumstances on the national energy crisis. They haven’t moved into the property and their contract says it doesn’t start until 1st September, however they have signed and paid a deposit. What are my options in this scenario?
Yes that’s right. Not content with gorging on the passive income provided by the UK student loan scheme to top up his pension pot, this charmer – who takes advantage of students by causing them to sign for his houses a full year in advance and gets around regulation of resale of utilities by whacking the cost onto the rent with a bit for his back pocket – is now whining like a baby because the cost of utilities has gone up. Pass the tiny violin.
All the sangria you can drink
We should worry about this. For students in HMOs in September without an all-inclusive bills deal, things are about to get very very expensive indeed – a glance around suggests that they are now very hard deals to come by. And for those with one in poorly insulated homes, we need to be on the look out for landlords that will be imposing “fair use” caps based on cash not units of energy buried in contracts – or worse, nastier landlords switching off heating in a student house at the touch of an app.
Anyway, stepping in to fix the sort of abuses we see in this space, the Westminster government’s white paper on a fairer private rented sector has now been published – and really could, in the words of Shelter, be a gamechanger for tenants generally and student tenants specifically.
There are two big changes that are causing the landlords to have a panic. The first is that so-called “Section 21” or “no fault” evictions are to be abolished – wish Shelter says will mean:
Gone will be the days of families being uprooted and children forced to move school after being slapped with a Section 21 no-fault eviction for no good reason.
To make that work all tenants who would previously have had what are called an Assured Tenancy or an Assured Shorthold Tenancy are going to be moved onto a single system of periodic tenancies. And this is where it gets interesting.
All tenants will be given the right to leave a tenancy by providing just two months’ notice – right now students normally have to sign for a year. Landlords like this one aren’t happy:
On two months’ notice, they need to put a loophole for students who have to be on a fixed-term contract otherwise the whole model falls apart”
But the move to periodic tenancies also means that tenants will have a right to stay on – so for example if a student gets to the end of the academic year and wants to stay for another – or even just for a few months – they will have the right to, generating reactions like this:
You need the confidence that students will leave at the end of the academic year – if one of them decides to stay on for a few months, you couldn’t operate as a student landlord.”
Landlords lobbied hard an exemption for students – but the government says while most students will continue to move property at the end of the academic year, for certain students this is not appropriate – for example because they have local ties or a family to support:
It is important that students have the same opportunity to live in a secure home and challenge poor standards as others in the PRS. Therefore, students renting in the general private rental market will be included within the reforms, maintaining consistency across the PRS
There are massive potential implications here. As it stands, huge numbers of landlords of student properties take advantage of the tightness in the market in their locality to lock students into signing astoundingly early, with SUs running campaigns to encourage students not to to no avail. But if an existing tenant could stay on, you can’t really offer their room until they’ve gone. We could well go from students panicking about pressure to sign early, to panicking because they’re having to sign so late.
And the thing about a student staying on in a property as a graduate is that even if they end up surrounded by other students, that could end up causing all sorts of complications around council tax – as well as, in the event they eventually move out, tempting landlords to move someone in that is very much not a student half way through the academic year to keep the cash rolling in.
Even tinier violins
There are plenty of other headaches for landlords in the package. A new legally binding Decent Homes Standard (DHS) will be created, and where a tenant pays rent on a property that is not at the standard, they’ll be able to claim that rent back. Given right now the Department for Levelling Up, Housing and Communities reckons that a full 21 per cent of private rented sector homes aren’t at that standard, there’s some fun coming.
A new portal will effectively host a bunch of compliance information on individual properties and make clear rights and responsibilities to both landlords and tenants. Even so half of the problem (especially for students) in this sector has long been the ability to enforce rights – but good news here too, as the government will introduce an ombudsman that can handle complaints about the behaviour of the landlord, the standards of the property or where repairs have not been completed within a reasonable timeframe. Sadly although local authorities will also get new enforcement powers, I doubt they’ll be getting extra money to use them.
They’ll have the powers to put things right for tenants – including compelling landlords to issue an apology, provide information, take remedial action, and/or pay compensation of up to £25,000. They’ll also be able to require landlords to reimburse rent to tenants where the service or standard of property they provide falls short of the mark.
Also of specific interest is rent – inevitably there’s no rent controls in here, but rent will only be allowed to go up once a year, tenants will get two months notice of a rent increase, excessive increases will be able to be challenged, landlords will have to repay any upfront rent if a tenancy ends earlier than the period that tenants have paid for (including if that student bails after two months) and they’re either considering a power to limit the amount of rent that landlords can ask for in advance – which will be a head scratcher for those landlords who worry about international students by asking them for six months or a year’s with of rent in advance.
Also as it stands, plenty of landlords refuse to consider someone as a prospective tenant, simply because they are on benefits or have young children. The legislation will make it illegal for landlords or agents to have blanket bans on renting to families with children or those in receipt of benefits. This doesn’t as yet include students (and it would really help if it included international students), but they will also “explore if action is needed” for other vulnerable groups that may struggle to access PRS accommodation.
And in all seriousness, while the press has been mocking enhanced rights for tenants to have pets in their property, that could be quite important for students and their mental health. If therapy dogs are allowed on campus why aren’t cats allowed in some student kitchens?
Deck the halls
You might have got this far and have thought – what about halls? It appears that much of that capacity will be exempt from manby of the measures – but the material here is unclear whether there will be an expectation that all of the measures and standards will be implemented by the codes and schemes that cover halls in universities and the private sector or not. There is certainly an intention to drag the private halls not currently in the national code schemes into them, which is great news and long overdue – and halls will also be excluded from that “staying” on stuff:
We recognise that Purpose-Built Student Accommodation cannot typically be let to non-students, and we will exempt these properties – with tenancies instead governed by the Protection from Eviction Act 1977 – so long as the provider is registered for a government approved code
Taken as a whole package this is pretty dramatic stuff, which in truth does make renting to students much less attractive and less profitable – albeit that we’re starting from a gold mine that exploits the young and the government subsidy, so bringing that balloon down to earth a bit sounds right to me.
We’ll likely see pressure on students to sign join contracts where many currently have individual ones in an HMO. And more broadly, landlords are bound to whinge and whine about this sort of thing – but whether the proposals will actually result in supply being constricted is a different question.
SUs are going to want to lobby very hard indeed to ensure that the stuff proposed in here isn’t watered down by the landlord lobby in coming months – and universities are going to want to think very carefully about potential restrictions on supply and what that does to realistic student number capacity as this market settles into better rights for tenants in coming years.